Re-joining the NHS Pension Scheme

Matthew Harrington
Financial Planning
Matt Harrington, Lovewell Blake financial planning

Changes to pension annual allowance rates that were announced in this years budget, those who previously opted-out may now consider opting back in.

Matt Harrington, Lovewell Blake financial planning

Who is eligible to join the NHS pension scheme?

If you’re new to the NHS and have not previously been a member of the NHS pension scheme (NHSPS), you may be eligible to join if you are between 16 and 75. This is also applies to you if you are working under a contract for services (such as GPs, dentists and ophthalmic practitioners). If you are new joiner, you will be in the 2015 scheme.

Can I re-join the NHS pension scheme after opting out? 

If you have previously opted-out of the NHSPS, or have deferred benefits in the scheme, your options on re-joining will depend on which section you were previously a member of:

  • 1995 section* – yes you can re-join the 1995 section of the scheme, providing you return before age 60, have not transferred your benefits to another provider, and the break has been less than 5 years
  • 2008 section* - yes, providing you return before age 75, have not transferred your benefits to another provider, have not had a refund of contributions, and the break has been less than 5 years
  • 2015 section – yes, you can re-join up to age 75

*With the 1995 and 2008 sections, if you re-join the scheme, you will only remain in them until 31 March 2022. From 1 April 2022 both sections will close for new benefit accrual, and all future membership will build up in the 2015 section. This is because of the ‘remedy’ measures being put in place by the government for public sector pension schemes.

Re-joining the Scheme following a break of five years or more

If you re-join the NHSPS after a break of five years or more, your earlier membership will be treated separately to your new membership. Regardless of which section you were in previously, you will re-join the scheme in the 2015 section.

Upon re-joining you’ll have a one-off opportunity to transfer your earlier membership. If this applies to you, the NHS Business Services Authority will contact you, and you can then request a personalised options pack. You will have 3 months from the point the NHS BSA contact you to decide on what you wish to do with your earlier membership.

What happens if I opt out of the NHS pension scheme?

If you have less than two years qualifying membership in the NHSPS, you may have the option to receive a refund of your contributions (less tax and National Insurance).

If your membership is more than two years, the benefits you have built-up to the date of leaving will become ‘deferred’. These benefits are not lost, and will remain in the scheme and continue to increase each year in line with inflation. Referring to the points above, if you re-join the scheme at a later point you may be able to add to these benefits again.

If not, then they will be ready and waiting for you when you come to retire.

Opting out of the NHSPS is not a decision that should be taken lightly. Whilst it not only limits future pension accrual, it will also impact on the level of ill-heath and lump sum death benefits payable. 

How do I re-join the NHS pension scheme after opting out? 

If you are eligible to re-join the NHSPS, you should notify your employer, in writing or by email, that you wish to re-join. The date for re-joining cannot be backdated, and so membership will take effect from the first day of the next pay-period following your notification that you wish to re-join.

Can I re-join the NHS Pension Scheme if I return to NHS work after ill-health retirement?

In certain circumstances, you can re-join the NHSPS after ill-health retirement. This will depend on which section of the scheme your benefits are being paid from, and the classification of your ill-health retirement (Tier 1 or Tier 2). 

Is the NHS pension scheme good? 

In broad terms (and my humble opinion), yes. Whilst the NHSPS has evolved over time from the 1995 to the 2008 section, and now the 2015 section, it is a good pension scheme. At its core, it is designed to provide you with a guaranteed, inflation-protected income in retirement - for as long as that may be.

In addition to this, there is the possibility of an ill-health pension, or death-benefits payable to your family after you’re gone (including a lump-sum death benefit, and continuing spouse’s/dependant’s pension).

To really demonstrate the value of the NHSPS, I refer my clients to the ‘Hypothetical Annuity Cost’ on the Total Reward Statement. This shows you the value you would need in a private pension to be able to ‘buy’ benefits from the open market on a like-for-like basis. I very much doubt the amount you’ve paid in contributions to the NHSPS would match up to that figure – even after taking into account potential investment growth.

What else do I need to know about my NHS pension scheme benefits?

Within this article, I’ve mentioned both the NHS Business Services Authority, and Total Reward Statements. Both are valuable resources for NHSPS members (active or deferred) and something you should familiarise yourself with.

Firstly, the NHS BSA website provides general information on the various sections of the NHSPS and the related aspects of membership (including the member guides for each section).

Secondly, your Total Reward Statement provides an overview of your NHS employment benefits – this includes pay, arrears, employer pension contributions, clinic excellence awards – and your accrued pension.

If you’re in active membership, this will be refreshed each year (typically in August), so it’s important to keep a copy of each year’s statement to help track your benefits and make sure everything is recorded correctly.

Whilst the NHSPS is a good scheme, it is also complex, and whether it is right for you will come down to your individual circumstances. That is why we always recommend seeking independent financial advice before making decisions on joining, leaving or retiring, to ensure you fully understand your options and the impact of such a decision.

We have a dedicated team of Healthcare accountants who can help. 

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